IMF Staff Completes 2015 Article IV Mission to Cameroon
An International Monetary Fund (IMF) mission, headed by Mr. Mario de Zamaróczy, visited Cameroon during September 10—23, 2015 to conduct the IMF's 2015 Article IV Consultation discussions. The mission met with Prime Minister Philémon Yang, Minister Secretary General at the Presidency Ferdinand Ngoh Ngoh, Minister of Finance Alamine Ousmane Mey, Minister of Economy, Planning, and Territorial Development Emmanuel Nganou Djoumessi, several other ministers, National Director of the Bank of Central African States Jean-Marie Benoît Mani, other senior officials, and representatives of the private sector, labor unions, civil society organizations, academia, and technical and financial partners. The discussions focused on recent economic developments and the short- and medium-term economic outlook. At the end of the mission, Mr. de Zamaróczy issued the following statement:
“The global and regional economic environment has significantly deteriorated since the last IMF staff consultations in May 2014. The slump in world oil prices has impacted government revenue, even though this trend has been partly offset by a decline in fuel subsidies. The terrorist attacks in the far north, as well as the problem of displaced persons within the country and the refugees from the Central African Republic, have generated additional expenditure.
“However, the economy has demonstrated some resiliency, which has enabled it to grow by almost 6 percent in 2014, thanks in particular to increased oil production and rising public investment. Inflation has remained low at nearly 2 percent, notwithstanding the increase in retail fuel prices on July 1, 2014. The external current account deficit, including grants, was 4.5 percent of GDP, thanks in particular to the growth in oil exports, which has offset the negative impact of declining world prices.
“The overall fiscal deficit, on a cash basis and including grants, has deteriorated significantly, moving from 4.1 percent of GDP in 2013 to 5.7 percent of GDP in 2014, primarily as a result of the increase in capital expenditures, which reached 8.5 percent of GDP. The deficit has triggered an upturn in financing requirements, leading to an increase in public debt.
“For 2015, growth in GDP is expected to be close to 6 percent once again, thanks to a strong showing by certain sectors, such as construction, public works, financial services, and the increase in oil production. Nonetheless, GDP growth will be dampened by the full-year impact of the oil price shock, as well as by the efforts to combat terrorism. Inflation is expected to rise as a result of the delayed effect of the increase in fuel prices, although it should stay below the regional criterion of 3 percent. The fiscal deficit should narrow somewhat to 5.4 percent of GDP, despite the steady fall in oil revenues, which will be offset by the favorable performance of tax receipts and one-time revenues generated by the sale of mobile telephony licenses. Low oil prices will allow for substantial savings in terms of fuel subsidies, which in turn should help offset the increase in security and investment outlays. The medium-term fiscal outlook remains, nonetheless, a source of concern, because the high level of public investment expenditures–coupled with lower oil revenues and persistent security outlays–will continue to have an impact on annual deficits. The financing of these deficits will increase public debt. In this regard, the IMF mission recommends a review and a reduction of tax exemptions and special fiscal regimes to widen the tax base and increase government revenues.
“The IMF mission has voiced its concerns regarding the level of public debt, which is growing rapidly and which has been contracted on increasingly onerous terms. The mission recommends the adoption of a debt policy that is more oriented toward borrowing on more concessional terms. In addition, it is calling for the public investment program to be rationalized and consolidated with other investment plans, such as the “emergency plan.” Emphasis should be placed on the most profitable projects having a substantial impact on growth. The mission further underscored the importance of reforms designed to enhance the efficiency of capital expenditure. The mission also noted the weak financial performance of the public enterprise sector and stressed the contingent liability risks that it could create for the government. Consequently, the mission recommended a better monitoring of the performance and of the debt situation of public enterprises.
“The mission stressed the need to implement the reforms required to promote stronger and more inclusive growth. It noted the slight decline in poverty observed since 2007, yet emphasized the challenges ahead, in particular, the need to reduce social inequalities. The mission acknowledged the efforts to strengthen banking supervision.
“The IMF Executive Board is expected to consider the staff report on the 2015 Article IV Consultation with Cameroon in mid-November 2015. The mission wishes to thank the authorities for their warm hospitality, their excellent cooperation, and the constructive dialogue that was the hallmark of the discussions.”